M/S SAMI DIRECT MARKETING PVT LTD V. THE ASST. COMMISSIONER OF INCOME TAX

ITA/31/2021

AI Insights

The case involves M/s. Sami Direct Marketing Pvt Ltd, the appellant, contesting an order by the Income Tax Appellate Tribunal (ITAT), Bengaluru, which denied depreciation on trademarks for the assessment years 2013-2014 and 2014-2015. The appellant argued that the ITAT failed to consider a crucial valuation report submitted during the proceedings, which was the basis for their claim of depreciation on trademarks. The respondent, the Assistant Commissioner of Income Tax, Circle-6 (1)(1), Bengaluru, did not contest the remittance of the case but reserved the right to challenge the correctness of the valuation report. The High Court of Karnataka, upon hearing the arguments, decided to remit the matter back to the ITAT for a thorough reconsideration of the valuation report and the associated claims for depreciation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 752709 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 20-03-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND
• Assessee Lawyers: K K CHYTHANYA
• Keywords: Depreciation; Income tax appeal; ITAT; Trademarks; Valuation report
• Section: 43(1); 32(1)(ii); 260-A

Judgement Text

"- 1 - ITA No. 31 of 2021 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 20TH DAY OF MARCH, 2023 PRESENT THE HON'BLE MR. JUSTICE P.S.DINESH KUMAR AND THE HON'BLE MR. JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 31 OF 2021 BETWEEN: M/S. SAMI DIRECT MARKETING PVT LTD PAN: AAOCS 4393 P NO.30 AND 31, 5TH CROSS 5TH BLOCK, KORAMANGALA BENGALURU-560 034 (REPRESENTED BY ITS DIRECTOR SRI. RAJESH GOPALAN KUMAR S/O SRI. GOPALAN KUTTIKATU SHANKARAN NAIR AGED ABOUT 51 YEARS) …APPELLANT (BY SHRI. K.K. CHYTHANYA SENIOR ADVOCATE FOR SHRI. TATA KRISHNA, ADVOCATE) AND: THE ASST. COMMISSIONER OF INCOME TAX CIRCLE-6 (1)(1), ROOM NO.753 BMTC BUILDING, 7TH FLOOR KORAMANGALA 6TH BLOCK BENGALURU-560 095 …RESPONDENT (BY SHRI. K.V. ARAVIND, SENIOR STANDING COUNSEL) THIS ITA IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, PRAYING TO FORMULATE THE SUBSTANTIAL QUESTIONS OF LAW STATED THEREIN AND ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU ‘B’ BENCH BEARING IN ITA NOS.1191 AND Digitally signed by ANUSHA V Location: HIGH COURT OF KARNATAKA - 2 - ITA No. 31 of 2021 1192/BANG/2018 DATED 07.02.2020 FOR THE AYS 2013-2014 AND 2014-2015 AS ENCLOSED IN ANNEXURE-A AND ALLOW THE APPEAL AND SET ASIDE THE IMPUGNED ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, BENGALURU ‘B‘ BENCH BEARING IN MP NOS.90 & 91/BANG/2020 DATED 25.09.2020 FOR THE ASSESSMENT YEARS 2013-2014 AND 2014-2015 AS ENCLOSED IN ANNEXURE-B AND ETC. THIS ITA, COMING ON FOR FINAL HEARING, THIS DAY, P.S.DINESH KUMAR, J., DELIVERED THE FOLLOWING: JUDGMENT This appeal by the assessee directed against order dated February 7, 2020 in ITAs No.1191 & 1192/Bang/2018 for the A.Y.2013-14 passed by the ITAT1, Bengaluru, has been admitted to consider following questions of law; “1. Whether on the facts and circumstances of the case, the Tribunal is right in law in denying depreciation on trademarks? 2. Whether on the facts and circumstances of the case, the Tribunal is right in law in denying depreciation when the lower authorities have not invoked Explanation 3 to section 43 (1)? 3. Whether on the facts and circumstances of the case, the Tribunal is right in law in denying depreciation on trademarks bought in PY 2011-12 for the impugned years contrary to Explanation 5 to section 32(1)(ii) and principle of consistency? 4. Whether on the facts and circumstances of the case, the Tribunal is right in law in refusing to consider the valuation report as evidence before it rendering its action perverse?” 1 Income Tax Appellate Tribunal - 3 - ITA No. 31 of 2021 2. Heard Shri K.K.Chytanya, learned Senior Advocate for the assessee and Shri K.V.Aravind, learned Senior Standing Counsel for the Revenue. 3. At the outset, Shri Chytanya submitted that the valuation report submitted before the ITAT, which is the last fact finding authority, was not considered and the said issue has been raised as question No.4 in this appeal. He submitted that in view of undisputed fact of non-consideration of valuation report, the matter requires reconsideration in the hands of ITAT. 4. Shri Aravind submitted that revenue's right to contest correctness of the report be kept open and the matter may be remitted to the file of ITAT. His submission is placed on record. 5. In view of the above, the following; ORDER (i) Appeal is allowed; (ii) Order dated 07.02.2020 in ITAs No.1191 & 1192/Bang/2018 passed by the ITAT, Bengaluru is set-aside; - 4 - ITA No. 31 of 2021 (iii) The matter is remitted to the file of the ITAT with a direction to consider the valuation report subject to revenue's right to contest its correctness; (iv) Consequently, questions No.1 to 3 do not arise for consideration; (v) All contentions of the parties are kept open for the ITAT's consideration; and (vi) Since, the matter has been remitted, questions of law do not require any answer and accordingly, they are not answered. No costs. Sd/- JUDGE Sd/- JUDGE AV List No.: 1 Sl No.: 44 "